Mazzucato and Wray: Making Finance Work for Innovation

Welcome to our new video series called "New Economic Thinking." The series will feature dozens of conversations with leading economists on the most important issues facing economics and the global economy today.

This episode features Institute for New Economic Thinking grantees Mariana Mazzucato and Randall Wray, who are working together on an Institute grant on how to best finance the innovation we need in the 21st century.

Building on the seminal work of Joseph Schumpeter and Hyman Minsky, Institute for New Economic Thinking grantees Marianna Mazzucato and Randall Wray are bringing the disparate intellectual traditions of finance and innovation together in the search for insights about how finance might better serve the purpose of capital development. A key question in their exploration is whether financial innovations support value creation in the real economy or if they extract value from the real (productive) economy and, as a result, undermine the value creation and capital development process.

Wray and Mazzucato both have unique career trajectories for an economist. Wray came to economics relatively late in his academic career after studying psychology as an undergraduate, and Mazzucato studied history before finding the discipline. These diverse backgrounds have a strong influence on their research, as both Wray and Mazzucato approach economics as outsiders. Specifically, Wray’s perspective is informed by Minsky’s work on money and finance, while Mazzucato’s view is deeply influenced by Schumpeter’s thinking on innovation.

Together, they offer a unique perspective on the economics of innovation and on how well the financial sector is serving society. Is finance engaged in "creative destruction" or is its speculation really a case of "destructive creation?" Watch the interview to see what they have to say!